They’ve been running the Palio in Siena officially since 1482 but the history goes further back.
We were walking through the Lupa Contrada on the day of the race and I snapped a photo of a trainer walking the Wolf horse. Well, lupa means wolf in Italian, and the Contrada is the neighborhood – so, House of Wolf.
The horse from the House of Wolf went wire-to-wire and won. We were on hand for it, checking a cultural box. It was crazy! Tens of thousands of Senese waving palios – flags – and singing profane songs. Even the schoolkids. If you get the chance, go. Even though it’s in August and the last place you want to be in August is Tuscany.
We left Siena in a sporty Spanish Cupra wagon and drove 500km to the Dolomites to cool off and found that most of Italy did the same thing. Tiny mountain roads packed with aggressive Italian drivers will get your pulse up. So will hiking the ridge at Seceda.
Sunday, we left Milan after seeing DaVinci’s Last Supper (what a treat) and flew to Paris and on to Denver. After all the traveling Karen and I have been so blessed to do, it’s still amazing that one can be in Milan, Paris and Denver the same day.
And so we were on the outside looking in at the USA. I frankly enjoyed the break abroad from us.
We were in Cortina when the Bureau of Labor Statistics botched data most don’t know about. I don’t recall the semiannual true-ups by the BLS using tax-roll and other data to square jobs numbers ever getting publicity. And I’ve modeled BLS data for 15 years.
Quietly behind the scenes, the BLS twice yearly redraws the monthly jobs data that’s become a big trading event. Usually it’s a change of about 0.1%. This one backed 800,000 jobs out of the tally.
What’s more, the data were slated out at 10am Eastern Time and somebody goofed. Brokers called the BLS. Which gave out the data! Imagine doing that as a public company.
And the bigger point to me, take 800,000 from the running monthly tally and you wind the jobs clock back to February 2023. In effect, it wiped out 18 months of net new jobs.
How can you run a country this way? And have the consumption and GDP numbers powered by that erroneous job-growth been adjusted down?
Like all developed economies, the USA is driven by consumption. It’s 70% of GDP (more if you consider its input to imports and business investment). If all the net new jobs of the past year went away, did the economy grow? Or was it all just higher prices?
These are questions everyone should be asking. No one is.
Now, look at the stock market. We had a violent correction in Tech stocks, a massive V-shaped implosion and rebound in the market. The VIX briefly shot near a record high, one of the steepest moves ever for volatility.
People were screaming and tearing at their clothing: “The yen carry trade is collapsing!!!!”
Overly dramatic but you get the point. Now we’re back to all-time highs, for the DJIA at least. As the song by former Men at Work frontman Colin Hay goes, “When I woke this morning, suddenly nothing happened.”
The data say it was all machines. The yen is up, not down.
And there’s the presidential election. A person who received not a single primary vote and wasn’t on the ballot as a presidential candidate is suddenly aflame with popularity and leading presidential polls. In 38 days she’s got the future figured out?
Imagine observing all these things from abroad, outside looking in. You wonder what might happen next.
According to market pundits, what’s coming next are new highs for stocks and lower rates for borrowers. Federal Reserve chair Jay Powell affirmed those assumptions from Sun Valley last week.
And pundits say the rally is “broadening out.” The best-performing sector year-to-date is Communications Services, home to Meta, Neflix, Google. But right behind is Utilities, home to, I suppose, suppliers of power to consumers of it, like AI server farms. Bitcoin miners. Also, air-conditioners.
This so-called broadening out – a spreading of returns from concentration in Big Tech stocks to other corners of the market – is a sign of a building bull market, we’re told.
We here at ModernIR in the quantitative market-data business have a good view of what’s coming five days out. Months out? Nobody can say.
But I can tell you this: A stock market driven by money needing size and liquidity doesn’t broaden out. Passives follow models. They may periodically trade big stocks for little ones to wash out capital gains. But it’s impossible for tens of trillions of dollars to stay long in small corners.
I think it’s the opposite. The money leaks into the corners at tops. Not bottoms. In a wild, extreme, statistical anomaly, 99% of S&P 500 stocks, as one of our EDGE super-users points out, have excess demand right now. That’s unsustainable.
I’m glad we were in Italy. You don’t know what tomorrow holds. Use today as though we might not pass this way again (thank you, Seals & Crofts).
